The Building Tradesman Newspaper

Friday, January 06, 2017

By The Building Tradesman

2016 construction up, down, and flat

The U.S. construction industry is continuing to grind its gears.

Dodge Data and Analytics reported on Dec. 22 that new U.S. construction starts in November retreated 6 percent from October. Each of the three major sectors of the industry. nonresidential, residential and non-building construction (usually public works) all saw falling activity during that month. For the first 11 months of 2016, total construction starts on an unadjusted basis were $627.2 billion, essentially matching the amount reported for the same period a year ago. During the second half of 2016, the year-to-date performance for total construction starts has shown consistent improvement - even with the recent deceleration - although the numbers are in comparison to the weaker activity reported during last year’s second half.

“The path of expansion for construction activity has been hesitant in recent years, with gains followed by setbacks, and this has certainly been true during 2016,” stated Robert A. Murray, chief economist for Dodge Data & Analytics. “After a lackluster second quarter, total construction starts showed improvement during the third quarter, and have receded so far during the fourth quarter. On the plus side, the year-to-date amount for nonresidential building in dollar terms is now showing growth, joining the gains that have been reported for residential building over the course of 2016. The public works sector remains slightly lower than a year ago, although the extent of its shortfall has become smaller.”

The flat pace for total U.S. construction starts at the national level during the first 11 months of 2016 was the result of a mixed performance for total construction starts at the five-region level. Year-to-date total construction gains were reported in the West, up 10 percent; the South Atlantic, up 9 percent; and the Midwest, up 6 percent. Year-to-date total construction declines were reported in the Northeast, down 1 percent; and the South Central, down 17 percent which reflected that region’s comparison to last year which included the start of several massive liquefied natural gas export terminals.

Michigan remains relatively robust

Michigan was one of 34 states to add construction jobs from November 2015 to November 2016, and despite an up-and-down employment pattern, our state was finishing last year in comparatively good shape.

The Associated General Contractors reported on Dec. 16 that Michigan gained 9,000 construction jobs during that 12-month period, a gain of 6 percent, earning a rank of No. 7 among the states. Michigan gained 2,500 construction jobs between October and November, and employed 158,900 construction workers in November.

“Most of the construction employment gains are coming as firms in many states work to keep pace with growing demand,” said Ken Simonson, chief economist for the AGC. “In other states, however, construction employment is being held back by either a lack of work where demand is weak or a lack of workers where demand exceeds the pool of qualified workers”

Fourteen states shed construction jobs between November 2015 and November 2016 while construction employment was unchanged for the year in Washington D.C. and two states. Alabama (-4.4 percent), Wyoming (-5.7 percent) and Kansas (-5.9 percent) lost the most construction jobs by percentage during that 12-month period.

AGC officials said construction employment will benefit if the incoming administration and Congress make infrastructure projects a top priority in 2017. They added that many other parts of the economy stand to benefit from increased investments in civil works projects that will lower shipping costs, increase business productivity and lower costs of many goods for consumers. Any delays in enacting new infrastructure investments could undermine broader economic growth, they cautioned.

“It is not just construction firms that stand to benefit from new the President-elect’s promise to rebuild roads, bridges and other public works,” Stephen E. Sandherr, chief executive officer for the association, said. “These new investments will make our entire economy more competitive, prosperous and successful.”